October 21, 2009

Posted by Dan Mihalopoulos, Hal Dardick and John Byrneat 5 a.m.; last updated at 12:41 p.m.

Mayor Richard Daley today proposed a 2010 budget that would hold the line on taxes and fees but dip deep into the reserve fund created by the controversial parking meter lease. He told the City Council that Chicago faces another tough year in a bad economy he compared to the Great Depression.

Daley said he would avoid service cuts in part by spending $370 million from the parking meter lease and trying to save $118 million by refinancing city debt.

While the mayor wants to slash the tourism promotion budget and end Chicago's longest-running public party, Venetian Night, he also has said he will not raise taxes, fines or fees.

Daley, who has repeatedly raised taxes and fees in his previous budgets, said he empathized with families, seniors and workers: "With so many people struggling, this isn't the time to ask them to pay more."

In a city, county and state buffeted by corruption scandals, the mayor also bowed to taxpayer concerns over "wrongdoing at all levels of government and business across the country.

"I know people are frustrated and they have every right to be," Daley said.

Faced with a budget deficit of more than $520 million, Daley is dipping deeper into the money generated by the $1.15 billion deal that allows a private company to operate and collect revenues from the city’s parking meters for the next 75 years.

In his speech, Daley said he reluctantly took the step of dipping into parking meter
reserves, which had been set up to earn interest that would replace
lost annual parking meter revenue.

“I had hoped to avoid this and I understand that some may have problems
with it, but as mayor, I have the responsibility to provide the
services that people need, especially now during these tough times when
they demand more from government and not less,” Daley said.

"Now is not the time to burden people with higher taxes or the
elimination of essential city services,” Daley added. “So I believe it
is responsible to borrow from the reserves.”

The mayor said the money used this year will be returned to the
parking meter reserve fund "after city revenues return to more normal
levels."

City revenues from the income, sales and real estate transfer taxes
have plummeted 31 percent from the record high just two years ago. And
the mayor said he did not expect a full recovery for several years.

But he emphasized that the city will still have $500 million in the bank
from the Skyway deal and $230 million from the parking meter payment.

"We can chose to use those reserves, or not, in the years ahead," Daley said.

After the deal was approved last year, Daley had said $400 million from the upfront payment by the parking meter company was supposed to remain in a long-term reserve fund. But according to the budget documents, Daley plans to “borrow” $270 million from the long-term reserve and spend another $100 million in other parking meter proceeds.

Aldermen briefed Tuesday by top Daley aides said there is no plan or timetable for paying back the money that will be taken from the long-term reserve.

After his speech today, council members were split on whether it was wise to use the parking meter lease reserve funds.

“I think this is what reserve are made for,” said Ald. Howard Brookins Jr., 21st. “Clearly, it’s raining. While we don’t know when this economic recovery will come, it’s not going to be for a couple of years.”

But Ald. Manuel Flores, 1st, said he was “very concerned” about dipping into the reserve fund. “That was intended for us to generate additional revenue through interest,” Flores said. “You are selling off that asset. You are throwing that asset away.”

As is typically the case, there does not appear to be widespread opposition by aldermen to Daley's spending plan.

Ald. Carrie Austin, 34th, called Daley's budget proposal "liveable."

"There's going to be a lot of little pain in it, but we have to tighten our belt a little more," said Austin, who chairs the council's Budget Committee. A budget with any kind of tax increase would not receive enough support to pass the council, she said. "Overall, my job is going to be to try to pass it," Austin said of the plan Daley unveiled.

Ald. Edward Burke, 14th, said Daley is "trying to make the best of a bad lot" by using parking meter money to solve the city's short-term financial crisis. "If it wasn't for those funds that were acquired from the long-term lease of the Skyway, the parking garages and the parking meters, we'd be in a boat without a paddle right now," Burke said.

But as the city searches for new sources of revenue, Burke, who chairs the powerful Finance Committee, said a casino may be the only longer-term solution.

"It has to come. There's no two ways about it," Burke said. "Is it going to come soon enough to help us? Probably not. But all one has to do is drive through a parking lot in Northwest Indiana and see all the Illinois license plates there. If those folks are going to lose there money, they might as well lose it in Chicago."

Ald. Thomas Allen, 38th, said he would like to see more property tax money held within the city's tax-increment financing districts as an incentive for developers to build in underutilized areas instead be used to hire more police officers and firefighters and otherwise improve the city as a whole.

"I'm saying we're handing out too much of the (tax-increment financing) money to private developers," Allen said. "It's public tax dollars, so I think citizens should be able to have access to it to help the public."

"That would be my goal, to continue to try to provide quality service and minimize layoffs," said Preckwinkle, who is running for Cook County board president. "Because it's not just that we're putting people on unemployment, we're less able to deliver quality services to the people of Chicago."

Ald. Ed Smith, 28th, said he can support the Daley plan as a decent short-term fix during bad financial times. "It doesn't really give us any real impetus for next year. It just sort of helps us by putting us in a position to hold the line on everything that was there from last year."

"It would be nice to provide better neighborhood services," Smith said, "But it is what it is, and you got to live with what it is."

Even before today’s budget speech, Daley had planned to spend more than $120 million from the parking meter deal to help balance the budget.

Some of the parking meter proceeds will go toward what the Daley administration says is $35 million in property tax relief designed to fill in a gap caused by the phasing out of a state-authorized limit in property assessments that lowered taxes for homeowners in Cook County. The maximum in property tax relief per homeowner, however, is only $200.

The tax-relief program will help lower income homeowners who are hit with steep tax property tax increases, said Pete Scales, spokesman for the Budget and Management Department.

On Tuesday, city council members said the city's other large pot of money--a $500 million reserve fund created nearly five years ago from the Chicago Skyway lease--apparently will go untouched.

Even before Daley's budget speech to aldermen today, the city already has spent a great portion of the money from the parking meter and Skyway paydays.

More than $400 million was used to balance this year's budget, records show. And the city already has announced plans to spend at least $146.3 million in privatization proceeds next year.

Some aldermen questioned the approach on Tuesday.

"If the parking meter money is depleted within five years, then what happens for the next 70 years of that contract?" asked Ald. Scott Waguespack, 32nd, one of five aldermen who voted against the meter lease.

City festivals also will take a hit under the budget.

Venetian Night, a boat parade and fireworks show, has been a Chicago tradition for more than 50 years, started at the behest of Mayor Richard J. Daley, the current mayor's father.

City officials said Tuesday they can no longer afford the $100,000 for fireworks or the $200,000 to police crowds estimated at more than 500,000.

"Operational costs exceeded the sponsorship revenue," said Cindy Gatziolis, spokeswoman for the Mayor's Office of Special Events.

Leaders of the Chicago Yachting Association, which organizes Venetian Night, said city officials had not informed them of the event's demise.

"We still feel strongly that we can do this event," said Scott Baumgartner, the event chairman for the association.

Other festivals, including the Chicago Country Music Festival, will be moved from Grant Park to Millennium Park, where the city does not have to bear the cost of closing down streets and putting up portable toilets, she said.

Budget documents given to aldermen also suggest funding cuts for the Convention and Tourism Bureau and city arts programs.

Ald. Robert Fioretti, 2nd, noted that Daley touted the importance of tourism to the local economy in his failed push to host the 2016 Summer Olympics.

"We need to keep attracting people to Chicago," Fioretti said. "Wasn't that the real purpose of [bidding for] the Olympics?"

Comments

ONCE TAKEN, THE CITY NEVER GIVES BACK. So WHEN DALEY SAYS IT WILL BE REPLACED DON'T BELIEVE IT. DON'T BELIEVE ANYTHING OUT OF DALEYS MOUTH. HE HAS BROUGHT SO MUCH CORRUPTION AND OVERSPENDING TO THE CITY, HE DIDN'T SEE IT CATCHING UP TO HIM NOW HE DOESN"T KNOW WHAT TO DO. HE CAN'T TAKE NO MORE AWAY FROM CITY WORKERS THERE AIN'T NOTHING LEFT TO TAKE. NOW THE BEST SOLUTION IS TO RID THE CITY OF A LITTLE MORE THEN HALF OF THEM DOUBLE DIPPING, CROOKED, ALDERMAN. THEY BLOAT THIER MONTHLY EXPENSE ACCOUNTS SO TAX PAYERS CAN PAY FOR THEIR LITTLE NECESSITIES, LIKE CELL PHONES FOR THEM AND THEIR FAMILIES, CAR PAYMENTS, LUNCHES, DINNERS, TRIPS, C'MON DALEY, YOU CAN KEEP 20 OF THEM, AND YOU CAN MAKE SURE THEY WILL STILL BOW TO YOUR EVERY WHIM. THINK OF THE MILLIONS YOU CAN SAVE ESPECIALLY WITH SOME OF THEM HAVING THEIR OWN BUSINESSES TO WHICH THEY PAY NO TAXES. AND DON'T FORGET THEIR DOUBLE and TRIPLE PENSIONS. WOW, YOUR SITTING ON A MULTI MILLION DOLLAR BAIL OUT OF THE CITIES BUDGET>

Daley's in one hell of a crack. He won't cut spending, but he's already raised taxes and fees as high as he can. Todd has taken the rest for the county. And the Mighty Quinn is waiting to pick off any left overs. Taxpayers (I hope!) are fed up to their butts! Now, all's that's left is to toss the whole reeking lot of them out of office. Will that lower our taxes? Probably no, but what the hell? It'll at least feel good...

Try getting the facts before you post. Aldermen have taken furlough days for the past 3 years and are included in the ask for 24 days in 2010. By the way they are in Unions and have taken not one single furlough day. Finally, since July 1, 2009 no City non union and many of the other Unions have given up every single holiday and in 2010 will be required to give up all paid holidays

Rob: 65% of the corporate budget goes to Public Safety, which of those firemen and police officers do you suggest we cut?

The mayor, who I have strongly supported in the past, has lost touch with reality. It's time for him to be replaced. The City Council, which has rubber stamped the parking and many other Daley Deals, needs to be overhauled. It's time for some real fiscal oversight in our government.

The city could also enforce traffic laws and dog leash laws. If you are caught without your dog on a leash it's a minimum $300 fine. All they have to do is spend one afternoon in Loyola park and easily get 15-20 minimum. That's a lot money for one park on one day.

The mayor said the money used this year will be returned to the parking meter reserve fund "after city revenues return to more normal levels."

This is not going to happen for a very long time. By that time Daley will no longer be mayor and only some schmuck who is mayor will have the inevitable task of raising taxes. Good luck to the citizens of Chicago who can afford to remain here. Can you say city sticker $200 or city income tax??? I can and would not be surprised.

(1) Copenhagen is in Denmark not Sweden
(2) I believe private money raised by the Chicago 2016 committee paid for the trip
(3) 24 days is for NON-Union management - the unions have different conditions and are negotiating

Too bad King Richie doesn't realize those aren't the ONLY 2 options...how about STOP SENSELESS SPENDING? That's a more viable option #3, but if he followed that path, his cronies would be broke...so no wonder that one has already been tossed.

So let me get this straight, tax revenues are down from an ALL TIME high 2 years ago. We were still running a deficit 2 years ago when Revenues were an all time high!! Of course now that we are not breaking records the city will be in a cash crunch! Taxpayers are not a bottomless pit to pay for city services.

This is monumental fiscal mismanagement not seen since Detroit.

Doesn't matter though, all these same jokers will stay right where they are.

What about cutting the union work force that is paid far more than the private sector and has extravagant benefits? How about privatizing those union jobs? We still have truck drivers sitting for hours at job sites and do not have to get out of the truck and work and taxpayers keep paying. How about fewer union work rules and more work for the high pay and benefits? Millions are wasted on these unions and their archaic/primitive work rules and excuses not to have to work like they do in the private sector. We need competition - how else do you motivate these "workers"? Some work hard but very many do not and it costs us millions. The private sector is seeing major belt tightening but many City laborers still stand around and the belt tightening is not from cut backs but less exercise from not working hard.

I detest his patronizing verbiage. It's so unauthentic. I also agree he's being vindictive. Now, how much did the bid for the Olympics cost? And, how many kids are dying in our schools? He's really out of touch.

Hey dimwits... Illinois gamblers will continue to cross state lines to gamble as long as the Illinois Health Nazis keep banning smoking in Illinois casinos. It doesn't take a brain surgeon (but it does take someone much smarter then "da mayor") to figure that one out. Smokers, gamblers and drinkers are one in the same person... you can't ban one without banning them all.

I find it interesting that Daley and his cronies on the city council don't think there is another alternative: spend less! Instead of asking city workers to take 24 days off a year, why not lay off 10% of the city employees? Then we're not just saving those salaries, but also reducing what we spend on the gold-plated city government retirement and healthcare benefits.

When a typical household has less income coming in (if one or both spouses gets laid off), their typical response is not to borrow from the rainy day funds or incur more debt, but rather they SPEND LESS MONEY!

All 50 aldermen on the Chicago City Council had to file paperwork earlier this year detailing their outside income and gifts. The Tribune took that ethics paperwork and posted the information here for you to see. You can search by ward number or alderman's last name.

The Cook County Assessor's office has put together lists of projected median property tax bills for all suburban towns and city neighborhoods. We've posted them for you to get a look at who's paying more and who's paying less.

Past posts

Clout has a special meaning in Chicago, where it can be a noun, a verb or an adjective. This exercise of political influence in a uniquely Chicago style was chronicled in the Tribune cartoon "Clout Street" in the early 1980s. Clout Street, the blog, offers an inside look at the politics practiced from Chicago's City Hall to the Statehouse in Springfield, through the eyes of the Tribune's political and government reporters.